Clone Investment Company Scams

An Old Scam With A New Face

A SCARS Insight – How Scams Work

For Hundreds Of Years There Have Been Investment Scams – But Today’s Scammers Have It Easier Than Ever!

From Romance Scams to Straight Investment Scams – Scammers Are Cloning Company Websites

Warning: Don’t fall victim to fraudulent investment opportunities

Investment scams can be hard to spot. Every year, victims lose hundreds of millions of pounds and dollars to criminals imitating genuine investment firms.

Even romance scams are morphing into investment scams, where the scammer lures in a victim with a fake relationship and then introduces an investment opportunity.

Victims worldwide are also being lured in by clicking on adverts that lead them to fraudulent websites designed to replicate the page of a real investment firm.

These Imitation Websites Are Known As “CLONED COMPANIES”.

Everyone needs to be aware of the increasing number of bogus investment websites, as even seasoned investors can easily be confused. Scammers are cloning websites with almost perfect attention to detail. And unlike many scams, Isreal seems to be a hub for many of these scams.

• In the first six months of 2021, In the UK alone more than£36,000,000 was lost to ‘cloned company’ investment scams.
• In the first six months of 2021, ActionFraud received more than 1,100 reports, equating to an average loss of £47,000 per victim, when investing money in cloned companies – however, assuming that only about 1% of victims report these scams the real number of victims in the UK in those same 6 months could be over 100,000.

What Is A Cloned Company? And How Do They Target Your Savings?

They are set up by fraudsters using the name, address, and corporate identification of real companies authorized to sell securities and investments.

The criminals running these scams engage with victims through a number of channels.

• Often they take out adverts on social media platforms and search engines designed to attract people to click on them by highlighting enticing offers of high returns.  The returns being promised by these criminal gangs are often modest so as not to arouse suspicion, but slightly better than the market rate, therefore appealing to those looking for long-term, ‘safe’ investments.
• Sometimes they are introduced through another scam or manipulative relationships, such as in the “Pig Butchering” form of romance scams. Where the victim is lured into a trusting relationship and then the investment opportunity is introduced.

How These Scams Work

Once a person clicks on the advert they are taken to an exact replica of a website belonging to a legitimate investment firm. The most sophisticated criminals will even clone the website domain name (i.e. the unique address registered to that site – usually with one letter off – these are called “typo domains”).

Once victims have registered their interest, they’ll be contacted by the offenders, who often obtain the names of genuine employees at investment firms and create seemingly legitimate company email addresses, but with very subtle changes such as one substituted letter (using the typo domain name).

There have also been instances of investors inputting their contact details into popular price comparison websites and then being phoned by criminals claiming to be from a well-known, legitimate investment firm.

Another tactic used by these criminals to target investors involves sending victims sales materials linking to websites of legitimate firms.

Eventually, given the false confidence by the various tactics used by cloned company scammers, victims will end up transferring their savings directly to criminal gangs under the false belief that they are sending them to a legitimate investment firm. Often, victims will not realize that they’ve been scammed until months later when they fail to receive quarterly returns or investment reports.

In some cases as a way to overcome skepticism, the scammers will ask for a small investment. Then wait a few days, and inform the customer that they had significant gains – in many cases even paying the profits back to the customer to get them hooked and ready for a much larger investment.

How To Protect Yourself

• In today’s world, you cannot trust any unsolicited investment advice. Even if you click on an ad do not trust who follows up.
• Reject unsolicited investment offers whether made online, on social media, or over the phone.
• Be cautious when dealing with large sums of money, even if you initiated the first contact.
• Look out for subtle differences such as letters replaced with numbers (e.g. S and 5, O and 0), additional words or spelling errors.
• Make sure you’re dealing with an authorized firm, but remember these are public registers that fraudsters can also use or take information from to sound legitimate.

In the United States

Look up investment companies of the FINRA website here: BrokerCheck – Find a broker, investment or financial advisor (finra.org)

If you find a suspect website or fake company report them to the Federal Trade Commission immediately at: https://reportfraud.ftc.gov/#/?orgcode=SCARS

In the U.K.

Check the FCA Warning List of firms to avoid. Always check the  FCA Register to confirm the contact details provided to you by the firm. If the website, email and telephone number don’t match, don’t invest.

If you have visited a website, you think is suspicious, report it to the National Cyber Security Centre, using their quick and easy referral tool.

If you think you’ve fallen victim to an investment fraud, report it to Action Fraud as soon as possible online at http://www.actionfraud.police.uk or by calling 0300 123 2040.

In Canada

You can verify investment companies at: https://info.securities-administrators.ca/nrsmobile/nrssearch.aspx

In Australia

Check an investment company or scheme – check if the company is licensed. A company that sells you investments must hold a license from ASIC, which controls what kinds of schemes they can sell you. Check the list of unlicensed companies. Check the product disclosure statement. Check if they are a registered public company. Check ASIC lists – Moneysmart.gov.au

In Other Countries

Always look in Google for the official government investment company registry, and search to find if they are not only registered but also their real contact information and website.

Always Get Impartial Advice Before Investing

No matter what your situation, always ask a professional about any opportunity before you make an investment. Many banks also have investment departments that you can ask.

Also never send money to an investment firm outside of your own country. Each country has regulations to protect consumers, but if you invest outside of your country there are no controls and no recourse.

More Information

• FCA issues warning over ‘clone firm’ investment scams | FCA
• Cloned firms: theft of the identity of authorized companies | FSMA
• Clone firms | Close Brothers Group
• Don’t clone out when you part with your cash – National Crime Agency
• Clone firms and scams that you didn’t see coming (penningtonslaw.com)
• Clone firm investment scams: how they work, how to spot them and stay safe | lovemoney.com